CAIRO: Amid the financial storm pelting the world economy towards recession, Egypt’s economy appears to be undergoing a more enduring stance, says regional director for the Euromoney Conferences.
“Economically, this is a very difficult time.. It is never going to be easy. But Egypt is at a much stronger place than most countries, said Richard Banks, Middle East director for the Euromoney Conferences.
“The banking system is well capitalized. The financial system is not exposed to [global] financial instruments, mainly debt products, he explained. “The government has built up a significant amount of foreign reserves ($35 billion) which gives a cushion and flexibility to Egypt.
Under the theme “Beating Inflation and Sustaining Growth, the 13th Annual Euromoney Egypt Conference will open Monday, bringing together prominent government officials, high-profile business leaders, and senior financial analysts under one roof.
“With the international economy on everybody’s mind, a lot of people are going to [attend] the Euromoney this year, raise questions, and take part in several debates and discussions, Banks said. This year’s Euromoney Egypt will shed light on various economic issues including inflation and growth rates, investment, and the securities market in the face of relentless global financial turmoil. The conference will also discuss Egypt’s banking and real estate sectors as well as infrastructure and energy products.
“Beating inflation and sustaining growth; I think these are the two key challenges that face the Egyptian economy.. They require a coherent policy response to deal with them effectively; and in my opinion, it looks like it’s coming, Banks pointed out.
For the first time in several months, consumer price inflation in urban parts of Egypt fell to 21.5 percent in the year to September from 23.6 percent in the year to August albeit at a 16-year high.
“The government recently announced policy measures that seem to be working on the inflation side which has come down, as well as an export-oriented policy by Trade Minister Rachid that we hope will maintain growth.
As the world economy appears set for a major downturn with the United States and Europe either in or on the brink of recession, Banks finds a silver lining for Egypt.
“The current economic environment and financial turmoil are positive for inflation rates. Commodity prices are falling; prices are falling across the board. That [adds] limited upward pressure on inflation rates going forward in the next year, Banks said.
However, he added, “inflation is not going to come down to 5 percent, but to mid-teens which is still good.
On the other hand, as the current global economic meltdown could drag Egypt’s record high inflation rates down, growth rates will subside.
“Egypt won’t get away with this [financial crisis] without having any negative impacts, said Banks. “Growth will slow down, and tourism receipts will also drop. Still, Egypt will not enter into a recession, but rate of economic growth will slow down.
Among major challenges facing Egypt at this stage, he explained, is raising exports. “There is a strong opportunity for Egypt within the European Union and the Mediterranean region. . Exports present a major challenge and opportunity for Egypt.
As the current financial turmoil caused panic in global stock markets, Egypt included, a rebound in the equities market is another challenge for Egypt.
“Prices on the Egyptian Stock Exchange are favorable and good companies are trading on low multiples, Banks pointed out. “Prices now do not reflect fundamentals, and the market will go up again.
He expects a turnaround within the second or third quarter of next year. “We will [eventually] see more capital flowing back to Egypt.
While Euromoney Egypt takes place this year amid a growing global economic crisis, Banks hopes the conference will send a “reassuring message on Egypt.
“We are still bullish on Egypt and see a lot of investment opportunities in the country.